FPI investment limits rise in stocks after govt decision on sectoral caps

The investment legroom for foreign institutional investors (FPIs) has risen in several companies. This is after the government’s decision to treat sectoral limits as FPI investment limit came into effect from April 1. On Friday, depository firms NSDL and CDSL released a list of companies where additional shares are available for FPIs. 

Market players said the higher limits have potential to attract billions in overseas flows but it may not play out immediately. “While the raising of FPI limits for stocks to respective sectoral caps is welcome move, the current FPI sentiment is not very conducive so as to attract flows just on the basis of this relaxation,” said Deepak Jasani, head retail research, HDFC Securities. 

Markets players said the sudden spike in shares of stocks such as Kotak Mahindra Bank and Larsen & Toubro was on account of the list issued by NSDL and CDSL. “Few heavyweights like Kotak Bank and L&T recouped some of the losses on account of expected MSCI changes,” said S Ranganathan, head of research, LKP Securities. 

He said the index provider will now be able to increase weightage for the domestic stocks. “MSCI will wait for the practical implemen­tation of these changes and the systematic publication of the new sectoral limits applicable to Indian securities before making any changes to the MSCI Indexes,” it had said in a release.